Economic Growth In Africa Research Articles

Does ICT Adoption Moderate the Impact of Entrepreneurship on Economic Growth in Africa?

Many African countries continue to face economic challenges even though the continent has much potential for economic progress. Entrepreneurship and ICT are one of the key forces behind economic change. However, little is known about how entrepreneurship, ICT, and economic growth affect economic resilience and development in Africa at the international level. Designing policies supporting a more resilient and inclusive African economy requires understanding this. This study, therefore, contributes to the existing literature by examining the direct and indirect impacts of entrepreneurship and ICT on economic growth in Africa. The study employs static and dynamic panel analyses to analyze panel data on 29 African countries from 2006 to 2020. The empirical results reveal that entrepreneurship positively influences economic growth in the long-run, but has a negative influence in the short-run, while ICT positively influences economic growth both in the short- and long-run. The moderating effects of ICT on the relationship between entrepreneurship and economic growth reveals that ICT positively strengthens the positive impact of entrepreneurship in Africa both in the short- and long-run. Furthermore, the causality results show that there is bidirectional among economic growth, entrepreneurship, and ICT adoption. Consistent with these findings, policy ramifications are highlighted.

Human Capital Development and Economic Growth in Africa

The study examined the human capital, and economic growth in Africa. Data used were collected over the period between1987 and 2023 for 20 African countries. Panel data were analyzed using unit root test and auto-regressive distributed lag model for long run and short run effects. Analysis was carried out on the combined countries as well as countries grouped into Blocs of North Africa, West Africa, East Africa, Central Africa and Southern Africa respectively. The result of the analysis showed that School enrolment and government expenditure on health exert insignificant positive impact of real gross domestic product growth rate, while government expenditure on education exert significant negative impact of real gross domestic product growth for combined sample of Africa countries. Also, on the long run, human capital variables including school enrolment, government expenditure on education and government expenditure on health has insignificant impact on real gross domestic product growth rate across all blocs though with varying magnitude and signs.

Foreign aid towards accelerated economic growth in Africa: the role of independent central banks, political institutions and monetary integration

Foreign aid towards accelerated economic growth in Africa: the role of independent central banks, political institutions and monetary integration

Foreign aid towards accelerated economic growth in Africa: the role of independent central banks, political institutions and monetary integration

Foreign aid towards accelerated economic growth in Africa: the role of independent central banks, political institutions and monetary integration

Private Capital Formation and Economic Growth in Africa: the Role of Monetary Policy

Private Capital Formation and Economic Growth in Africa: the Role of Monetary Policy

Impact of Innovation and Trade Participation on Economic Growth Among Selected African Countries

This study examines the impact of innovation and trade participation on economic growth among selected African countries from 1996 to 2021. This study applied nonstationary heterogeneous panel models utilizing pooled mean group estimators, mean group estimators and dynamic fixed effects estimators. Based on the results of the Hausman test, the PMG estimator was considered for the data analysis. The study revealed the significant role of industrial design, patents, trademarks, research and development, exports, and balanced trade policies in driving long-term economic growth in Africa. The synergies between innovation and trade participation are studied, emphasizing their amplified impact on economic growth. The study suggests practical policy recommendations for the selected African countries, urging governments to establish innovation ecosystems, encourage investments in design, strengthen intellectual property protection, prioritize infrastructure development, and develop balanced trade policies. Focusing on SMEs, offering incentives for research and development, and establishing trade promotion agencies are also recommended to create a conducive environment for innovation, trade, and sustained economic growth.

Leveraging innovation and global value chains participation for industrialization: An agenda for research in Africa

This paper examines the intricate relationship between innovation and Global Value Chain (GVC) participation, with a focus on Africa's increased integration into global networks. The study underscores the importance of National Innovation Systems (NIS) in fostering technological advancements and highlights the potential of GVCs to drive industrialization in African countries. Despite challenges like inadequate R&D infrastructure, limited financing, and human capital gaps, African nations have opportunities to leverage innovation for improved GVC integration. Using a systematic search and review methodology, the paper critically evaluates existing literature on innovation and GVCs, drawing lessons for Africa for improved GVC integration. It identifies key themes related to innovation, GVCs, and industrialization, emphasizing the role of both government and firms in facilitating successful GVC participation. The study suggests that strategic government interventions, such as coherent industrial policies and investment in quality infrastructure, are essential for GVC integration. Additionally, it advocates for African firms to adopt proactive strategies, including technology upgrading and export activities, to enhance their competitiveness in global markets. The paper concludes by highlighting the need for cross-border collaboration and regional integration to strengthen innovation capabilities and support sustained economic growth in Africa.

Foreign direct investment, trade and economic growth: a case study of South Africa

Global trade has significantly expanded over the past thirty years in both developed and emerging economies, a phenomenon assisted by advancements in transportation, telecommunications, and industry. Extensive trading fosters financial links between national economies, hence promoting economic progress. This article aims to investigate the interrelationship among foreign direct investment, trade, and South Africa's economic growth. Econometric techniques, including the autoregressive distributed lag bound test, were used to annual data from 1988 to 2022. The findings indicated that economic growth is positively affected by foreign direct investment and exports in both the short and long term. This indicated that foreign direct investment and exports are substantial contributions to economic growth.This analysis indicates that both foreign direct investment (FDI) and trade significantly impact the macroeconomic environment and influence economic growth. Developing countries such as South Africa must use diverse strategies to guarantee elevated rates and quality of economic growth. Improvements in the investment climate and the establishment of incentives are necessary to enable the equitable allocation of resources across various sectors to address employment challenges, poverty rates, and the maintenance of growth. Export-oriented strategies should be adopted. Therefore, it is essential to analyse the determinants of economic growth by examining foreign direct investment and trade in the context of South Africa, particularly in relation to the country's performance as measured against the National Development Plan targets since the post-1994 period.

Transformative pathways: understanding economic growth in Africa using the African Transformation Index

Transformative pathways: understanding economic growth in Africa using the African Transformation Index

Renewable energy, carbon footprints, natural resources depletion and economic growth in Africa

Purpose This study aims to examine the interplay between renewable energy consumption, carbon footprints, natural resources depletion and economic growth. Design/methodology/approach It engaged 45 African countries using the generalized method of moments (GMM) approach. Data from the World Development Indicators for the period 2000–2023 are used to analyse the relationships among these variables. Findings The result indicates a positive and significant effect of greenhouse gas emissions on economic growth in all regions of Africa, except for Southern Africa. Regarding the depletion of natural resources, the authors observe a dominant negative effect on economic growth. Thus, an increase in the depletion of natural resources contributes to the reduction of economic growth in most regions of Africa, notably West Africa, East Africa and sub-Saharan Africa as a whole. Moreover, the depletion of natural resources can also have negative social impacts, such as conflicts over access to remaining resources, which can indirectly influence economic stability and growth. Originality/value This study contributes to the existing literature by providing empirical evidence of the positive effects of renewable energy consumption on carbon footprints, natural resource depletion and economic growth. By quantifying these relationships, the study offers valuable insights into the potential of renewable energy to address pressing environmental and economic challenges.

Correction to: The conditional effects of party system change on economic growth in Africa

Correction to: The conditional effects of party system change on economic growth in Africa

A new reading of the relationship between financial development, trade openness, vulnerability and economic growth in Africa: New perspectives from method of moment’s quantile regression

One of the most frequently debated subjects in international forums is economic growth, which is regarded as a global priority. Consequently, researchers have turned their attention from conventional economic growth at a single average coefficient to divisible economic growth at levels of its value. Although the existing literature has discussed several determinants of economic growth, our article contributes to examining the sources of economic growth in African countries during the generations of reforms from 1990 to 2019 and in the context of economic vulnerability. The variables used in the analysis are gross domestic product, trade openness, financial development, and economic vulnerability. The study uses a quantile regression econometric model to examine these variables at different stages of reform. Quantile regression (QR) estimates for quantiles 0.05 to 0.95 showed mixed results: financial development is favorable to African economic growth at all quantile levels. However, economic vulnerability is a major impediment to economic growth at all quantile levels. In addition, it was found that a high degree of trade openness has a detrimental effect on African economic growth from quantile 0.5 of the dependent variable. Finally, another important result proves that financial development is a remedy for decision-makers against economic vulnerability.

Insurance market development and economic growth in Africa: Contingencies and thresholds of structural transformation

Insurance market development and economic growth in Africa: Contingencies and thresholds of structural transformation

How Financial Development Heterogeneity, Macroeconomic Volatility, Domestic Investment, and Digital Economy Are Driving Sustainable Economic Growth in Africa

The roles of finance are well stipulated in the various indicators of the sustainable development goals (SDGS). However, the extant literature still finds conflicting outcomes of the finance-led growth. Hence, this study redirects empirical evidence by unbundling the effects of financial development on sustainable economic growth into aggregated and disaggregated, focusing on seven robust indicators (financial development index, financial institution index, depth, and access, and financial market index, depth, and access) in selected African countries from 1995 to 2021. Similarly, the intervening roles of government expenditure, digital economy, domestic investment, human capital, macroeconomic volatility, and trade openness are evaluated based on advanced estimators. Findings show that the seven indices of financial development drive sustainable economic growth in Africa both in the long and short runs. Similarly, government expenditure, digital economy, and human capital promote sustainable economic growth both in the short- and long-term periods. The driving effects of domestic investment are only noticeable in the long run. Conversely, trade openness and macroeconomic instability are noted to be growth-deterring. Policy insights that support sustainable economic growth in Africa emanate from the outcomes.

The conditional effects of party system change on economic growth in Africa

AbstractAfrican party systems vary considerably in their patterns of stability and change over time. This article examines how economic growth has been shaped by such party system fluidity—in particular, the frequency, scope and variety of change—while taking account of the constitutional regime (i.e., level of democracy) within which these party system dynamics occur. To do so, we use Arellano-Bond generalized method of moments models to test the impact of party system fluidity and the level of democracy on economic growth in Africa during the post-independence period (1970–2018). We find, consistent with previous research, that democracy has an uncertain effect on growth. However, party system fluidity is reliably and positively correlated with growth. Its effects are particularly strong whenever an unstable party system coexists with an autocratic regime, which suggests that this specific political context—which has often been associated with democratization—is especially conducive to economic growth.

Remittance Inflow, Investment, and Economic Growth in Africa amidst COVID-19 Pandemic

Africa has fared well in the aspect of remittance receipts in recent years; however, the region recorded a decline in remittances amid the COVID-19 pandemic which constrained the circular flow of income significantly and ultimately economic growth. In view of this, this study investigates the economic effects of remittance inflows and investment on economic growth in Africa amid COVID-19 pandemic using a panel of 48 economies and estimated with pooled OLS and two-step system GMM. The study employed two distinct approaches for estimation; pre-COVID-19 (2010–2019) and amid COVID-19 (2010–2023). The results indicate that the behavior of remittances, investment and economic growth in Africa is not significantly different between pre-COVID-19 and amid COVID-19. That is, remittances remain a significant economic growth catalyst in Africa whereas investment is not (though with growth effect potential). Overall, the study concludes that African economic policy stakeholders and other relevant policy authorities should sustain the current remittance and labor policy frameworks with possible fine-tuning where applicable while doubling their investment efforts especially in productive sectors of the economy.

Nexus between natural resource endowments and economic growth in selected African countries

Africa began implementing the Sustainable Development Goals (SDGs) in 2015 emphasizing on sustainable management and effective use of natural capital to spur economic growth (Goals 12, 14, and 15). This study using World Bank data sets from 46 African countries selected for the years 2000 to 2022, examined the nexus between natural resource endowments and economic growth in Africa. We used the system generalized method of moments (sys-GMM) and dynamic panel threshold regression (DPTR) to analyze the data. The findings of the two-step sys-GMM estimation using 'xtabond2' revealed that when the institutional quality variable is added and excluded from the model, natural resource dependence negatively impacts economic growth, but the impact is greater when the institution is excluded. In the estimation of the interaction variable of natural resource dependence and institutional variable included in the model, natural resource dependence positively impacts economic growth. The results of the DPTR using "xthenreg" showed that when the threshold value of natural resource dependence is ≤ 1.73% of gross domestic product, natural resource dependence has a positive impact on economic growth and a negative impact when the threshold value is above 1.73%. Similarly, when the institutional quality threshold is ≤ 0.277, natural resources dependence impacts economic growth negatively; above the threshold (0.277), the impact is positive. In conclusion, natural resource endowment is a curse with no or low-quality institutions and a blessing with high-quality institutions. Thus, building strong institutions and proper utilization of natural resources helps to minimize the adverse impact of resource endowments on economic growth.

The threshold analysis of the Official Development Assistance (ODA), Foreign Direct Investment (FDI), and economic growth in selected African countries

There is a scarcity of research on the analysis of thresholds of official development assistance (ODA), foreign direct investment (FDI), and economic growth in Africa. Most of the studies focused on analysing the correlation between official development assistance (ODA) or foreign direct investment (FDI) and economic growth. This study stands out from others by adopting a comprehensive approach to analyse the threshold analysis of ODA, FDI, and economic growth in many countries on a continental scale. We examine the threshold for ODA, FDI, and economic growth by analysing annual data from 1980 to 2018 in 30 African countries. The primary method used for the estimation was the panel threshold regression approach. The threshold analysis test assessed the impact of ODA, FDI, and economic growth. The current study utilised threshold analysis and found a positive coefficient of 0.0620, indicating a favourable correlation between FDI and economic growth. On the contrary, the negative coefficient of 0.0683 shows a detrimental correlation between ODA and economic growth. Therefore, officials must enforce the level of ODA that is necessary to stimulate FDI and foster economic growth in Africa. Furthermore, it is crucial for authorities to implement a monitoring system to closely monitor these thresholds and adjust the policy accordingly in response to changing economic situations. The findings of this study will not only contribute to academic discourse, but will also provide vital perspectives for politicians, practitioners, enterprises, and foreign investors on how to effectively implement policies that stimulate economic growth and attract foreign investment in Africa. Furthermore, this study offers recommendations for further research in the domain of international capital flows.

How are Economic Governance Institutions Moderating the Effect of Economic Complexity on Trade, FDI Inflow, Environmental Degradation, and Economic Growth in Africa?

How are Economic Governance Institutions Moderating the Effect of Economic Complexity on Trade, FDI Inflow, Environmental Degradation, and Economic Growth in Africa?

An empirical investigation of capital flight and economic growth nexus in Africa

ABSTRACT This paper investigates the impact of capital flight on economic growth in Africa using 54 African countries from 2000 to 2021. The study employed the GMM and the dynamic panel threshold regression estimation techniques. GMM results revealed that capital flight negatively and significantly affects economic growth in Africa. The study also revealed that external debt repayment and outward foreign direct investment, proxies of capital flight, have a negative and significant effect on economic growth in Africa, except foreign portfolio investment outflow, which positively and insignificantly influences economic growth. Again, the dynamic panel threshold estimation results also revealed that capital flight negatively affects economic growth at all levels of capital flight in Africa. The study also revealed that all the proxies of capital flight, external debt repayments, foreign portfolio investment outflows, and outward foreign direct investment negatively and significantly affect economic growth above a certain threshold. However, external debt repayment has an insignificant negative effect on economic growth below the threshold in Africa. Based on the findings, African countries should implement stringent policies to curb capital flight and regulate external debt repayments and outward foreign direct investment to enhance economic growth.